Case Competition 2009
ACE Applied Cognitive Engineering Ltd.
How to slam dunk from an air ball ?
Team No 7 :
Gilli Rosenzweig
Yana Berkovits
Oded Naim
David Sugarman
FACULTY OF MANAGEMENT, THE LEON RECANATI GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
1
THE ELI HURVITZ INSTITUTE OF STRATEGIC MANAGEMENT
Case Competition 2009
Agenda
1.
Company profile
2.
Strategic analysis
3.
Proposed solution
4.
Summary
1
2
Case
Competition 2009
Company Profile
About ACE Applied Cognitive Engineering Ltd.
Privately owned, Israeli based company, established in 2003
Developed a unique cognitive engineering model for brain fitness
IntelliGym® proved to improve real time decision making skills
Key resource - IP in cognitive engineering modeling
Outsourcing all functions apart from modeling
Current target markets: basketball and ice-hockey markets in
North America
3
Case
Competition 2009
Company Profile - Continue
Current estimated Financials
P&L
2004
2005
2006
2007
2008
$50
$50
$50
$50
$50
0
$100
$100
$150
$100
$150
0
in K US$
$300
$300
$450
$150
$300
150
$600
$600
$1,050
$250
$550
350
$350
$350
$1,400
$150
$700
200
0
0
150
500
700
Revenues
Basket Ball
Total Revenues
Accumulative Revenues
Cost of Sales
Accumulative cost of sales
Gross Profit
Accumulative Gross Profit
Other revenue
R&D Grants
Investors
Expenses:
Advertising and Promotion
NMS
R&D
Operating/GA
Total Expenses
Accumulative Expenses
Profit Before Tax
Accumulating Balance
4
$500
$300
$50
$60
$70
$40
$20
$200
$30
$280
$280
$220
$220
$200
$60
$320
$600
-$320
-$100
$150
$60
$280
$880
$170
$70
$50
$30
$120
$1,000
$230
$300
$50
$30
$100
$1,100
$100
$400
Case
Competition 2009
Ace’s Vision & Goals
Vision:
To set the sports industry standard for cognitive brain training
Goals:
Expand Operations to reach accumulative sales of US$ 50 M
within 5 years
Increase cash flow and maintain long term sustainable revenue
growth
Improving our competitive positioning in the fast growing cognitive
brain fitness market
5
Case
Competition 2009
Strategic Analysis
Brain fitness customer segments
Changes in USA Market Volume
US$ M
100
80
60
40
20
0
Corporate – Fortune 1000
companies; military & Sport
teams
K12 school systems
Health & Insurance providers
General self-improvement
products
Hyper competition - standards and rules are in flux
Positioning against hyper competition
1. Price and quality
3. Strongholds
6
2. Timing and knowhow
4. Deep pockets
Case
Competition 2009
Strategic Analysis - SWOT
Strengths
Unique Cognitive Engineering expertise
Professional's positive opinion
Proven 30% improvement game performance
Unique and unmatched cognitive fitness niche
Reliable investor and promoters committed for future
product
High entrance barriers for non-cognitive market, only 20
specialist in the world, 3 committed to Ace
7
Case
Competition 2009
Strategic Analysis - SWOT
Weaknesses
User Interface and product website
Limited marketing
Pricing module
Long time business model
Outsourced operations
8
Case
Competition 2009
Strategic Analysis - SWOT
Opportunities
Hypercompetition growing market
Competitors have not exploited all potential markets
Sports segment under saturated with no dominant solution provider
in Cognitive fitness
BIRD commitment for investing and marketing support for a new ice
hockey product
9
Case
Competition 2009
Strategic Analysis - SWOT
Threats
Strong Australian, Israeli & other cognitive
market players
Relatively low entrance barriers for the cognitive industry players
Wide array of products that offer to improve players performance
Need to raise funds to match BIRD support (challenge)
10
Case
Competition 2009
Strategic Analysis - Continue
Brain Training Future Trends
Increased emphasis on brain maintenance for retirement
communities (becoming standard in residential facilities)
Physical and mental exercise will be better integrated
Broad government initiative
Better and more widely available assessments of cognitive function
Brain training will be added to corporate wellness and leadership
initiatives
Increased differentiation to reach specific segments
11
Case
Competition 2009
Proposed Solution
Business Model
Focus on the competitive sports industry
Simplify products and services
Different marketing and pricing models for various target markets
Develop a generic product for ball games, an affordable solution for nonprofessionals
Expand global positioning in countries with large populations, technological and
gaming consumer culture
Fund raising
Substantial change in Marketing and distribution strategies
Explore global partnering/JV opportunities
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Case
Competition 2009
Proposed Solution - Continue
Strategy Alternatives
Products
Segments
Geography
New products
• Generic
•
•
Core
Business
Expansion
Ice Hockey
Scouting Tool
Geographic
•
Vertical Integration
•
Asia
Europe
No Change
Innovative
Business
Expansions
13
Horizontal Integration
Case
Competition 2009
Explore Complementary new
companies
(Cogstate / Cognifit)
Proposed Solution - Continue
MARKETING STRATEGY - NEW PRODUCTS
Generic “ONE Ball”
Soccer training system
Candidate evaluation system
for Scouters
Referees tool
Back to the Game
CATCH THE CUSTOMER!
ONE BALL FOR ALL
14
Case
Competition
2009
Proposed Solution - Continue
MARKETING STRATEGY
Aggressive marketing
The World is our playground – Global exploration
Targeting promising markets: European Ice-Hockey
and Asia Pacific basketball
Distribution through chain stores
Cooperation with leading sports brand companies
Focus on International sports events: FIFA World Cup 2010,Olympic games 2012
Advertise in our products
Friendly user interface
Recruit leading trend setting professionals
15
Case
Competition
2009
Proposed Solution - Continue
Business model varification process
Revenue model
Segmentation
Market penetration
Steady annual growth
ACTION PLAN
Customer satisfaction
MEASURES
The
products
Marketing
Target
16
Version release.
Actual
Case
Competition
2009
Proposed Solution - Continue
SOLUTIONS SUMMARY
Present
Future Additions
Segments
Sports :
Basketball & Ice-Hockey
Generic product, basketball, soccer, ice-hockey
and others.
Products
Basketball & Ice-Hockey
Cognitive trainer.
Generic ball game trainer, soccer trainer,Judge
trainer, Candidate evaluation (for scouters), back
to the game testing, new editions & revised
pricing
Geographic
North America
Europe, Japan, China, Korea
Competitive
advantages
1. Cognitive know how
of the basketball game
2. Highly regarded in the
coaching community
1. Better feedbacks on the relativity of current
player performance to actual basketball playing
2. Cognitive data comparison to professional
levels: college players, NBA players etc
3. Growing DB of players’ performance
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Case
Competition
2009
Proposed Solution - Continue
Financials
2009
2010
2011
2012
2013
2014 (Q1&2)
Accumulated
Revenues
Basket Ball
Hockey
All Play
Scouting
Referees
Foot Ball
Back to the Game
Other Revenues
Advertising revenues
Total Revenues
Accumulative Revenues
Cost of Sales
$220,000
$462,000
$0
$440,000
$0
$300,000
$0
$0
$0
$0
$350,000 $1,135,000
$0
$0
$706,200
$854,000
$1,530,000
$200,000
$100,000
$1,863,500
$0
$1,170,620 $1,567,062 $1,231,706
$1,185,400 $1,568,540
$881,854
$4,153,000 $10,415,300 $10,041,530
$420,000
$642,000
$464,200
$260,000
$426,000
$292,600
$2,736,350 $1,723,635 $7,808,485
$450,000
$945,000
$694,500
$5,358,988
$4,929,794
$26,439,830
$1,726,200
$1,078,600
$15,616,970
$2,089,500
$100,000
$570,000 $2,437,000
$570,000 $3,007,000
$171,000
$701,100
$200,000
$300,000
$300,000
$200,000
$5,453,700 $10,675,370 $17,587,537 $21,614,875
$8,460,700 $19,136,070 $36,723,607 $58,338,482
$1,576,110 $3,112,611 $5,186,261 $6,424,463
$1,100,000
$58,339,882
$171,000
$872,100
$399,000 $1,564,900
$2,448,210
$3,005,490
$399,000 $1,963,900
$4,969,390 $10,083,939 $16,924,394 $21,367,724
Cost of Units
Personal
Proffesional
Total Cost Of Sales
Accumulative cost of sales
Gross Profit
Accumulative Gross Profit
Other revenue
R&D Grants
$800
$800
Investors
$2,000,000
Expenses:
Advertising and Promotion
$350,000 $2,000,000
NMS
$50,000
$50,000
R&D
$500,000 $1,000,000
Operating/GA
$300,000
$500,000
Total Expenses $1,200,000 $3,550,000
Accumulative Expenses $1,200,000 $4,750,000
Profit Before Tax
$800,200
$15,700
Accumulating Balance
$800,200
$784,500
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Case
$5,560,821 $10,747,082 $17,171,545
$5,114,549 $6,840,455 $4,443,331
$21,368,424
$1,600
$4,000,800
$2,000,000
$2,000,000 $2,000,000 $3,000,000 $1,500,000
$50,000
$150,000
$150,000
$150,000
$1,000,000
$250,000
$250,000
$250,000
$400,000
$400,000
$450,000
$250,000
$3,450,000 $2,800,000 $3,850,000 $2,150,000
$8,200,000 $11,000,000 $14,850,000 $17,000,000
$1,555,490 $2,314,549 $2,990,455 $2,293,331
$770,990 $3,085,539 $6,075,994 $8,369,324
Competition
$17,172,245
$0
$0
$0
$700
2009
$10,850,240
$600,000
$3,250,650
$2,300,210
$17,001,100
$8,369,724
Summary and Conclusions
Focus on the sports industry with global expansion
Develop branded products
Generic product for the non – professionals.
Professional solutions for selected competitive sports
Using IP & the DB to develop candidate evaluation tool for scouters
Aggressive marketing targeting FIFA World Cup 2010
Focused financial plan and management cost reduction
Explore global partnering opportunities
Raise additional funds and research grants
Implementation will increase sales up to $50M by 2014
Become an industry standard
Substantial ROI
19
Case
Competition
2009
Thank You
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Case
Competition
2009